Author:

Share this Article

Today, we learned that right-wing economists don’t like progressive taxation. Not a bombshell, you would think: but a letter signed by 20 economists calling for the 50p tax band to be scrapped was deemed important enough to be the BBC’s main news story. If you’re wondering who’s behind this initiative, it’s being funded by big business using the PR firm Westbourne. This is a blatant attempt by the rich and powerful to soften up public opinion into supporting their selfish economic interests. It’s an old trick of the wealthy to conflate their interests with those of society as a whole.

If you want to read the arguments of these mouthpieces of Britain’s economic elite being shredded, I recommend reading the ever-excellent Richard Murphy’s piece. The 50p tax band was one of the most popular policies of the last Labour government. At a threshold of £150,000, it applies to the richest 1% of the population (about 328,000 individuals, to be specific). We live in an era where a crisis of neo-liberalism perversely led to more aggressive doses of neo-liberalism than ever before: here was the one striking exception.

But I don’t think we should be forced into a defensive position on this. Let’s not simply defend the 50p tax band. Instead, let’s push for it either to be increased to 60p, or to take the threshold down from the current £150,000 to £100,000. In a country where if you earn £21,000, you are bang in the middle, decreasing the threshold would still only affect the very wealthiest – the top 2%, to be precise.

It is said that higher taxes will just encourage tax evasion by the wealthy. It’s worth noting that – to flip the argument around – the low level of benefits is never offered as an excuse for so-called ‘benefit cheats’. But a more progressive taxation system should be combined with an all-out war on tax evasion and avoidance by the wealthy (worth around £70 billion a year) – from loopholes to tax havens.

It’s not as though there’s a lack of money sloshing around at the top. In the current economic crisis, working-class people are being made to suffer the most. The average Briton is experiencing the biggest squeeze on living standards since the 1920s. But, between 2010 and 2011, the richest 1,000 Britons saw their wealth go up by nearly a fifth. At the end of 2010, it was reported that boardroom pay leapt by 55%. As the bank balances of the richest continue to soar, why not increase the top rate of tax to increase revenues as an alternative to devastating cuts?

Tory opponents of more progressive taxation argue it will damage the economy. Given they back an austerity drive that objectively is damaging the economy, there is an element of chutzpah in this. But it is worth looking at countries with high tax rates whose standard of living is higher than our own: like Sweden (56.6%), Norway (54.3%), Finland (53%) the Netherlands (52%), Denmark (51.5%) and Belgium (50%). But it is questionable whether impoverished Albania has been given much of a boost by its tiny top rate tax (10%); the same goes for Macedonia (10%), the Ukraine (15%) and Romania (16%).

Britain did once have far higher taxes on the rich, peaking at 98% in the 1970s. But our economic growth between the 1940s and the 1970s was greater, more stable and more equitably distributed than it was after Margaret Thatcher trashed the post-war consensus. Indeed, the three catastrophic economic crises of post-war Britain have all taken place in the neo-liberal era: in the early 1980s, the early 1990s and – of course – today. In his book Keynes: Return of the Master (2009), Lord Skidelsky found that average British unemployment in the Keynesian era of high taxes on the rich was 1.6%. In the neo-liberal period initiated by Thatcher’s governments – with ever-lower taxes on the top – it was 7.4%. So much for high taxes being a block on job creation.

The 20 right-wing economists may be part of an orchestrated campaign by wealthy businesspeople, but let’s take their letter as an opportunity and go on the offensive. At a time when working Britons, the unemployed and the poor face being hammered by cuts and – in the case of VAT, higher taxes – the case for the rich to pay more is unanswerable. It is popular and it makes economic sense. And – just as importantly – it would allow us to do what only the right are currently doing: dictating the terms of political debate in Britain.

Comments are closed

Latest

The pistol has been fired and the race has begun. For many Labour activists door knocking and phone banking has become a regular part of evenings and weekends as the fight to return a Labour government on 7 May intensifies. Over the past few weeks two topics of doorstep conversation have leapt out at me. One is the passion felt by people of all ages, particularly the older generation, for the NHS. The second, predictably, is public concern over immigration. […]

Last month David Cameron called for all 18- to 21-year-olds who have failed to find a job or a place in training to be forced to undertake community work. Under Tory plans those aged between 18 and 21 who have not had a job for six months will be barred from claiming benefit unless they agree to start an apprenticeship or complete community work. The plan is designed to ensure that the 50,000 young people “most at risk of starting […]

Labour candidates for Mayor will be trying to fund their campaigns in all manner of ways – but Christian Wolmar (the transport expert who joined the race first and remains the only candidate who isn’t an elected politician) has gone down the crowdfunding route. Wolmar is trying to raise £3,000 for his campaign by next week – and has currently raised nearly half of that sum. Although as with all crowdfunding, he must raise the whole sum or he gets […]

Yvette Cooper, the Shadow Home Secretary, has asked an urgent question in the Commons about abuse allegations at Yarl’s Wood. Yarl’s Wood is an immigration detention centre that opened in 2001. Ever since then guards (who come from private company Serco, which runs the facilitiy) are have faced serious accusations that there has been ongoing mistreatment of the people detained in the facility. This includes reports of sexual abuse and degrading treatment. On Monday, Channel 4 aired a documentary which had […]

75% of Labour PPCs want to see Trident scrapped, according to information collected by the Campaign for Nuclear Disarmament (CND). CND have surveyed 79 Labour prospective parliamentary candidates (PPCs) – which includes both current MPs and new candidates. Of those asked, 75% said they wouldn’t vote to renew Trident. This is roughly a quarter more than those who said the same in a ComRes poll for the BBC Sunday Politics in September last year (which surveyed 73 people). Meanwhile, in the CND […]